CANDAO v PEOPLE  responsible and accountable for the funds of the said office in the
G.R. No. 186659-710 | Oct. 19, 2011 Autonomous Region in Muslim Mindanao
Villamara, Jr., J.
Group 2
FACTS
On August 5, 1993, Chairman Pascasio S. Banaria of COA constituted a team of
auditors from the central office to conduct an Expanded Special Audit of the Office
of the Regional Governor, Autonomous Region for Muslim Mindanao (ORG-
ARMM).
 State Auditors Heidi L. Mendoza (Team Leader) and Jaime Roxas
(Member) were directed to conduct the said audit under the supervision of
Jaime P. Naranjo (State Auditor V).
 From August 24 to September 1, 1993, the expanded audit was thus
conducted on the financial transactions and operations of ORG-ARMM for
the period July 1992 to March 1993.
As stated in Special Audit Office (SAO) Report No. 93-25 submitted by the audit
team, it was found that illegal withdrawals were made from the depository
accounts of the agency through the issuance of 52 checks payable to the order of
petitioner Israel B. Haron (Disbursing Officer II) without the required
disbursement vouchers.
In a letter, Chairman Banaria demanded from petitioner Haron:
 to produce and restitute to the ARMM-Regional Treasurer immediately the
full amount of ₱21,045,570.64; and
 submit his explanation within 72 hours together with the official receipt
issued by the ARMM Regional Treasurer in acknowledgment of such
restitution.
The Office of the Special Prosecutor, Office of the Ombudsman-Mindanao, filed in
the Sandiganbayan criminal cases for malversation of public funds against the
following ORG-ARMM officials/employees:
 Zacaria A. Candao (Regional Governor),
 Israel B. Haron (Disbursing Officer II),
 Abas A. Candao (Executive Secretary) and
 Pandical M. Santiago (Cashier).
They were charged with violation of Article 217 of the Revised Penal Code
Criminal Case Nos. 24569-24574, 24576-24584, 24593, 24595-24620
 42 counts involving checks in the total amount of ₱17,190,585.00
 Disbursing Officer of the Office of the Regional Governor,
 conspired with [Abas] Candao, Executive Secretary of the same office
 withdraw the amount of P500,000.00 from the depository account of the
Office of the Regional Governor thru the issuance of Check payable to the
order of accused Israel B. Haron, without the required disbursement
voucher and
 once in possession of the said amount, took, misappropriated, embezzled
and converted to their own personal use
Criminal Case Nos. 24585- 24592 and 24594
 9 counts involving checks in the total amount of ₱3,854,985.64
 Israel B. Haron,
 in connivance and in conspiracy with Zacaria Candao
 withdrew the amount of P500,000.00 from the depository account
of the Office of the Regional Governor thru the issuance of Check
payable to the order of accused Israel B. Haron without the
required disbursement voucher
Criminal Case No. 24575
 Israel B. Haron
 in connivance and in conspiracy with Pandical Santiago (Cashier)
and Candao
 took advantage of their official positions and withdrew the amount
of P120,000.00 from the depository account of the Office of the
Regional Governor
At their arraignment, all accused pleaded not guilty to the charge of malversation.
 Santiago died and consequently the case against him was dismissed.
Sandiganbayan Ruling
 found petitioner Haron guilty beyond reasonable doubt of malversation of
public funds under Article 217 of the Revised Penal Code, as amended,
committed in conspiracy with petitioners Zacaria A. Candao and Abas A.
Candao who were likewise sentenced to imprisonment and ordered to pay a
fine equivalent to the amount of the check in each case, as follows:
Criminal Case Nos. 24569-24584, 24593, 24595-24620
 Israel B. Haron and Abas A. Candao - convicted of 43 counts of
Malversation of Public Funds
 each was sentenced to indeterminate prison term in each case of 10
years and 1 day of prision mayor, as minimum, to 18 years, 8
months and 1 day of reclusion temporal, as maximum, and
  ordered to pay a fine in each case equivalent to the particular check
involved, without subsidiary imprisonment in case of insolvency
and
 penalty of perpetual special disqualification to hold public office
and other accessory penalties provided by law.
 shall be entitled to the benefit of the three-fold rule as provided in
Art. 70 of the Revised Penal Code, as amended.
Criminal Case Nos. 24585-24592 & 24594
 Israel B. Haron and Zacaria A. Candao – convicted of 9 counts of
Malversation of Public Funds
 each was sentenced to indeterminate prison term in each case of 10
years and 1 day of prision mayor as minimum, to 18 years, 8
months and 1 day of reclusion temporal, as maximum, and
 ordered to pay a fine in each case equivalent to the particular check
involved, without subsidiary imprisonment in case of insolvency
and
 penalty of perpetual special disqualification to hold public office
and other accessory penalties provided by law.
 shall be entitled to the benefit of the three-fold rule as provided in
Art. 70 of the Revised Penal Code, as amended.
The Sandiganbayan found no merit in petitioners’ claim that the subject checks were
covered by existing disbursement vouchers which were belatedly submitted and
received by the COA Central Office.
 It said that had those vouchers really existed at the time of the 52
withdrawals petitioners made from December 29, 1992 to March 30, 1993,
petitioner Haron could have readily produced them when required to do so
by the special audit team.
 Said court likewise did not give credence to the testimony of Corpus in
view of the August 27, 1993 Certification issued by then COA Auditor
Gagwis that she has not received the vouchers mentioned in the transmittal
letters.
 Gagwis’ explanation contradicted the testimony of Corpus that
when he returned to his office, he found the original vouchers
together with the transmittal letters still there in his filing cabinet
and have not been submitted to the COA Resident Auditor.
The Sandiganbayan noted that petitioners presented no proof that the cash advances
intended for "peace and order campaign" were spent for public purposes
 the alleged disbursement vouchers did not indicate any detail as to the
nature of the expense/s such as purchase of equipment, services, meals,
travel, etc. and
 there were no supporting documents such as the Request for Issuance of
Voucher, Purchase Request and Inspection Report of the items supposedly
purchased.
 More importantly, the vouchers were not accomplished in accordance with
existing COA circulars because they are unnumbered and undated
With respect to petitioners’ assertion that the audit conducted by the COA special
audit team was incomplete and tainted as it did not follow procedures because the
person audited were not notified thereof, the Sandiganbayan found these allegations
unsubstantiated
 audit team thru their team leader State Auditor Naranjo, informed the
management of ORG-ARMM thru the COA Resident Auditor of the
expanded special audit to be conducted
 even requested for the original copies of the disbursement vouchers together
with their complete supporting documents covering the 52 checks.
 despite said letter, the ORG-ARMM failed to heed the audit team’s request.
 For the failure of petitioner Haron to account for the funds
involved in the illegal withdrawals when asked to do so, the
presumption arose that he misappropriated the same
 presumption was not overcome by defense evidence.
In its Resolution, the Sandiganbayan denied the prosecution’s motion to cancel bail
bonds and petitioners’ motion for reconsideration.
ISSUE # 1: WON Sandiganbayan erred in convicting the accused petitioners for the
crime of malversation despite proof that contrary to information charged, there were
disbursement vouchers except that COA refused to accept the same. – NO
The failure of a public officer to have duly forthcoming any public fund or property
with which he is chargeable, upon demand by any duly authorized officer, shall
be prima facie evidence that he has put such missing funds or property to personal
uses.
The following elements are essential for conviction in malversation cases:
1. That the offender is a public officer;
2. That he had custody or control of funds or property by reason of the
duties of his office;
3. That those funds or property were public funds or property for which he
was accountable; and
 4. That he appropriated, took, misappropriated or consented or, through
abandonment or negligence, permitted another person to take them.23
All the foregoing elements were satisfactorily established by the prosecution in this
case. Petitioners have not rebutted the legal presumption that with the Disbursing
Officer’s failure to account for the illegally withdrawn amounts covered by the
subject checks when demanded by the COA, they misappropriated and used the said
funds for their personal benefit.
The Sandiganbayan categorically ruled that the disbursement vouchers were
inexistent at the time of the issuance of the subject checks and expanded special audit
based on its findings that:
 Haron could not produce the vouchers upon demand by the COA;
 Gagwis certified at about the same time that to date she has not received the
vouchers mentioned in the supposed transmittal letters of March 4 and
March 30, 1993;
 the entries in the duly certified Report of Checks Issued by Deputized
Disbursing Officer (RCIDDO) of the late Pandical M. Santiago, Cashier of
ORG-ARMM, showed that for the months of January, February and March
1993, there were indeed entries of checks issued with Haron as payee but no
disbursement voucher numbers as these were either lacking, detached or
missing;
 FBMS Chief Corpus testified that he discovered the supposed vouchers still
there at his office filing cabinet in May 1993 when these supposedly have
already been submitted to the COA Resident Auditor; and
 the supposed original disbursement vouchers belatedly submitted to the
COA central office last week of October 1993, were undated and
unnumbered with no supporting documents as required by COA Circular
No. 78-79
Contrary to petitioners’ claim, the special audit team could not have examined the
vouchers presented by the defense because the only indication of its actual receipt by
the COA was on October 23, 1993 long after the expanded audit was completed and
beyond the 72-hour deadline specified in the September 10, 1993 demand letter
addressed to Haron for the restitution of the total amount of illegal withdrawals.
Certification dated August 18, 1998 issued by ARMM Chief Accountant Fontanilla
stating that the vouchers were regular because these were properly recorded in the
JAO, was not given credence by the Sandiganbayan.
 Upon scrutiny of the JAO covering the period January to March 1993, said
court found that it failed to indicate the particular disbursement voucher that
corresponds to each of the 52 checks, aside from the fact that it was
prepared by the ARMM Chief Accountant who is under the control and
supervision of the ORG.
Petitioners further raise issue on the regularity, completeness and objectivity of the
expanded audit conducted by the COA.
 However, records showed that the ORG-ARMM were duly notified of the
expanded audit at its commencement and was even requested thru the COA
Resident Auditor to submit the needed disbursement vouchers.
 By the time the expanded audit was conducted in August 1993 upon the
directive of the COA Chairman, petitioners, especially Haron, should have
seen to it that the records of disbursements and financial transactions
including the period January to March 1993, were in order and available for
further audit examination.
 In any case, even if there was no so-called entry conference held, there is
absolutely no showing that petitioners were denied due process in the
conduct of the expanded audit as they simply refused or failed to heed
COA’s request for the production of disbursement vouchers and likewise
ignored the formal demand made by COA Chairman Banaria for the
restitution of the illegally withdrawn public funds, submitting their
compliance only after the special audit team had submitted their report.
ISSUE # 2: WON Sandigan bayan erred in convicting accused petitioners Zacaria
Candao and Abas Candao despite the fact that the charge of conspiracy which is their
only link to the offenses has not been proven by reasonable doubt – NO
As the Regional Governor of ARMM, petitioner Zacaria A. Candao cannot exonerate
himself from liability for the illegally withdrawn funds of ORG-ARMM. Under
Section 102 (1) of the Government Auditing Code of the Philippines, he is
responsible for all government funds pertaining to the agency he heads:
Section 102. Primary and secondary responsibility. – (1) The head of any agency of
the government is immediately and primarily responsible for all government
funds and property pertaining to his agency.
Petitioners Zacaria A. Candao and his Executive Secretary Abas A. Candao are both
accountable public officers within the meaning of Article 217 of the Revised Penal
Code, as amended.
 No checks can be prepared and no payment can be effected without their
signatures on a disbursement voucher and the corresponding check.
 Their indispensable participation in the issuance of the subject checks to
effect illegal withdrawals of ARMM funds was therefore duly established
by the prosecution and the Sandiganbayan did not err in ruling that they
acted in conspiracy with petitioner Haron in embezzling and
misappropriating such funds.
Moreover, as such accountable officers, petitioners Zacaria A. Candao and Abas A.
Candao were charged with the duty of diligently supervising their subordinates to
prevent loss of government funds or property, and are thus liable for any unlawful
application of government funds resulting from negligence, as provided in Sections
104 and 105 of the Government Auditing Code of the Philippines, which read:

Sec. 104. Records and reports required by primarily responsible officers. – The head
of any agency or instrumentality of the national government or any government-
owned or controlled corporation and any other self-governing board or commission
of the government shall exercise the diligence of a good father of a family in
supervising accountable officers under his control to prevent the incurrence of loss of
government funds or property, otherwise he shall be jointly and solidarily liable with
the person primarily accountable therefor. x x x x

Sec. 105. Measure of liability of accountable officers. x x x

(2) Every officer accountable for government funds shall be liable for all losses
resulting from the unlawful deposit, use, or application thereof and for all losses
attributable to negligence in the keeping of the funds.

The fact that ARMM was still a recently established autonomous government unit at
the time does not mitigate or exempt petitioners from criminal liability for any
misuse or embezzlement of public funds allocated for their operations and projects.
 The Organic Act for ARMM (R.A. No. 6734) mandates that the financial
accounts of the expenditures and revenues of the ARMM are subject to
audit by the COA.
 Under Amended Organic Act (R.A. No. 9054), the ARMM remained
subject to national laws and policies relating to, among others, fiscal matters
and general auditing.
 Even if petitioners Zacaria A. Candao and Abas A. Candao invoke lack of
knowledge in the criminal design of their subordinate, Disbursing Officer
Haron, they are still liable as co-principals in the crime of malversation
assuming such misappropriation of public funds was not intentional, as
alleged in the informations, but due to their negligence in the performance
of their duties.